Guest Writer
“I would characterize the Pine markets as average. There has not been a lot of change over the past couple of months,” noted an Ontario manufacturer. “The upper grades are still moving well and there has been no concession on price. It is the low end, industrial grades that are slow because the demand isn’t there. This tells me that, generally, manufacturing is slowing down and they are not using up this product. I would go as far as to say we are in a recession. The lumber industry is a good benchmark to justify that.”
“With interest rates coming off in the next six months or so, I would say by spring we might see things turn around because it takes some time to get things going again,” reported a Quebec wholesaler. “We will see some housing start to stimulate again,” the wholesaler said, “but I think both potential home buyers and developers are not going to spend much money at high interest rates to start a project right now when they know that in three to six months from now that the rates are going to be noticeably less. If we look at a two percent swing in six months, that is going to add quite a bit to the incentive to get things rolling.”
A Quebec producer echoed, “The upper grades are moving well still, it is just the lower grades that are stagnant. It is not because of price; it is a result of demand being low. It is a bit of a trouble spot for the mills that are focused on Pine. The Spruce prices are in the tank right now and they often use White Pine as an alternative in the lower grades to satisfy the need for crating and similar items when the supply is tight. When there is not enough demand out there, there is more than enough Spruce to satisfy the need.”
According to another Quebec manufacturer, their “Wholesalers are selling the better grades to the retail store trade.
Our lower grade is going, either through a wholesaler or direct to a manufacturer that needs crating, pallets or finger jointing. That is the segment of the market that is slow right now. Everything else seems to be not too bad.”
An Ontario manufacturer noted, “That White Pine is doing okay and I think we are doing better than some of the United States product. The United States is slowing down a little bit, too and they can be a bit of a driving force. As long as things are good enough demand-wise in the United States, it keeps them out of our market but we are starting to see the United States firms send material into Eastern Canada, at what we would consider quite low prices and this can cause some grief. It is to be expected, as this happens every market cycle. We look at some of the mills down there and it ends up that they produce a lot of wood that must go somewhere. Some of those firms own an awful lot of land and they must weather the storm by moving their material.”
A Quebec wholesaler indicated, “I have heard there may be some material moving overseas at around break-even cost. I am not surprised by this because for some of the really large mills, in order to keep running, they have to be shipping product. We just can’t pile it up forever. It could be tough for an individual mill, but this helps in general because one gets some material off the market and without the huge supply, it helps to firm up pricing. In the past, going back maybe five to seven years, up until maybe a year ago, countries like India and Pakistan were taking significant volumes of White Pine out of the States and Canada, but that kind of fell apart. Say four or five years ago, they took some pretty good amounts of industrial product that was basically oversupply, which cleaned things up pretty well and we got some improvement in the prices.”
In the Spruce-Pine-Fir (SPF) market, a Quebec wholesaler reported, “We have just reached the end of the Quebec Construction Holiday for 2024, which is traditionally a quiet period. Currently, 2×6’s are outpacing 2×4’s. We are getting a little bit of a price bump here now that is more supply-driven than demand-driven. The prices tell the whole story; the picture could be better. The mills could be making more money, obviously, as a lot of them, not all of them, are losing money right now. The ones that are more focused on lumber are losing more than those that also have panels and other products.”
An Ontario producer echoed, “The lumber market is certainly softer now. I wouldn’t be surprised if it got better next year, but I think it is going to kind of look like this all year. It is steady, but we just can’t rally the prices to the break- even level just yet anyway. Interest rates will probably be helpful in the long term but not yet in the short term.
An Ontario wholesaler said, “That a couple of small cuts on one side of the border, it is only Canada that has cut so far. The United States hasn’t cut a lot and a big chunk of the business is in the U.S. I am not sure that a quarter point in the United States is going to make that much of a difference; it is a bigger story than that. We have got to get back to break even. There is a lot of Southern Yellow Pine out there and that has got to come off the market.”
A Quebec-based wholesaler reported, “Premium SPF grades are selling better. The box store business is pretty steady. They are doing a good job selling their products and they are consistent throughout this whole thing. It is really the builder’s side of the business that has come off and if we look at the price of 2×4 and studs, that really explains things. That is definitely down. I think next year will be better. I may be too optimistic, but if we look at the rest of the economy, things are good it’s just that lumber is taking a hit.”
An Ontario wholesaler explained, “We have been fortunate in Eastern Canada, with a relatively quiet fire season. We have not seen those big fires we had here in Quebec last summer. In Ontario and at least in most of Quebec, we have been lucky with the rain and have had some good soakings every now and again. I think by early in the New Year, the market situation should look better. We will get a few more cuts in our interest rates and then we should start to see at least some improvement.”
